With the U.S. Senate and House trying to balance out a 2007 Farm Bill that will escape a presidential veto, corn and soybean association leaders hope that the bill leans toward a safety net if price and production woes are waiting at the turn row.
The House version, a $286 billion bill approved (231-191), was sealed and delivered by late July. Rep. Collin Peterson, D-MN, chairman of the House Agriculture Committee, stands by the House bill. “For every dollar of new spending, we found a way to pay for it,” he says. “We (also) maintained a safety net.”
Meanwhile, National Corn Growers Association Chairman Ken McCauley supports the Farm Safety Net Improvement Act. It promotes a revenue counter-cyclical payment (RCCP) that would replace the current counter-cyclical payment and loan deficiency payments (LDPs).
The Senate RCCP proposal calls for a government payment to be triggered when a farmer's actual revenue (price x yield) falls below 90% of the forecasted state target revenue for a specific crop. Under the House's proposed bill, producers would have a choice to receive the traditional counter-cyclical payment or to receive a revenue-based counter-cyclical payment. Under the House revenue proposal, producers would receive payments for a commodity when the actual national revenue per acre for the commodity is less than the national target revenue per acre. The national target revenues for each commodity are based on the target prices in the 2007 Farm Bill.
“We want to get that at least down to a county level where a farmer could be in a revenue program closer to production on his farm,” says McCauley.
American Soybean Association Chairman Rick Ostlie, a Northwood, ND, grower, says ASA is pushing for a final bill that provides soybean producers with a higher target price. A higher loan rate, in the range of $6.30/bu., is another ASA goal after backing off a push for $6.85.
The House bill calls for a $6.10 soybean target, up from $5.80 in the 2002 bill. “Still, that's not high enough to get the acreage we need for sufficient soybean production,” says Ostlie, adding that in the 2002 bill, soybean growers didn't receive any payments on target prices while other crops did.
The House corn target price is $2.63/bu., wheat is $4.15/bu. and cotton is 70¢/lb.
Direct payments under the House bill are 28¢/bu. for corn, 44¢/bu. for soybeans, 52¢ for wheat and 6.67¢/lb. for cotton.
“This is not a social welfare program,” says Peterson. “This is a risk management safety net that production agriculture needs in order to operate.”
While the House bill calls for a $1 million or less adjusted gross income (AGI) limit for growers to receive support payments — based on three years' AGI — there are calls in the Senate and the Bush administration for that limit to be $250,000. The $1 million could draw out the veto pen, even though the 2002 bill has a limit of $2.5 million.
McCauley says AGI is a way to differentiate between farmers and investors. However, the move for AGI of under $250,000 is too low and could hurt many growers in poor crop and/or price years, he says. “About the time you have too much income for three years and are ineligible, that's the time you're going to need it.”
ASA's Ostlie agrees on the need for a higher AGI cutoff level.
Look for some in the Senate to push for payment limitations as a whole. Sen. Charles Grassley, R-IA, a long-time advocate of more drastic cuts in payment limitations, along with Sen. Byron Dorgan, D-ND, has introduced legislation with a $250,000-limit for farm payments in an attempt, they say, to better target farm program payments to family farmers.
Specifically, the bill caps direct payments at $20,000, counter-cyclical payments at $30,000 and marketing loan gains (including forfeitures), loan deficiency payments and commodity certificates at $75,000.
Another voice shaping the farm bill is the 21st Century Agriculture Project, a major farm program study co-chaired by former Sens. Bob Dole, R-KS, and Tom Daschle, D-SD. Among other things, it supports a $250,000 annual aggregate payment. “The core of the program must continue to include the two counter-cyclical elements of the current farm bill: a marketing loan program that treats all producers equally and the partially decoupled counter-cyclical program,” the project report says.
The 21st Century Project would also eliminate the direct payment program, “which has artificially increased land values and thereby made it more difficult for a new generation to take up farming,” its report says.
On another topic, Sen. Tom Harkin, D-IA, Senate Agriculture Committee Chairman, has complained that the House farm bill doesn't do enough to promote conservation. “As we get more fragile land into production to meet the demands for energy, we need conservation more than ever,” he says.
Meeting the overall needs of a good farm bill will be difficult because of Congress' “strict, pay-as-you-go” policy,” he adds.